Ericsson's long-established research and development campus in Athlone, Co Westmeath is expected to be of interest to Irish and overseas investment companies when it goes on the market from today.
Ross Fogarty of Knight Frank is to invite offers in excess of €19 million for the substantial complex which is rented at €1,797,568 and will show a net initial return of 10 per cent when standard acquisition costs of 4.46 per cent are taken into account. The 25-year lease has more than 10 years to run and provides for a minimum rental uplift of 10 per cent or open market rental value, whichever is the highest. The next review is due later this month and again in February 2022. In the meantime, the rent is guaranteed by the parent company, Telefon AB LM Ericsson, which had global sales in 2015 of €25.52 billion and an operating income of €2.25 billion.
The Ericsson facility stands on a site of 15.23 acres (6.16 hectares) and has been held as an investment for about 15 years by the Dublin property developer Gerry Gannon, who is now heavily involved in the house-building market.
Telecoms equipment
Ericsson is one of the longest-standing technology companies to have been based in Ireland, with its operation here dating back to 1957. The Athlone operation was established in 1974 and served as production facility for telecoms equipment until 1990, when it was converted to a research and development module.
The company subsequently spent about €10 million on upgrading two connecting office and software development facilities and an adjacent detached communications building. The two-storey Atrium block, which won an Irish architectural regional award in 1999, provides high-quality open-plan accommodation as well as executive offices. The block links up on two levels to the Rear Building which was largely redeveloped for offices and software development purposes. The two main buildings have an overall floor area of 13,018sq m (142,158sq ft). Facilities include a staff canteen and diningroom as well as a multi-purpose sports ground and on-site car parking.
Investor appetite
Mr Fogarty said that while the original recovery in the commercial property market was very Dublin-focused, investor appetite had now spread to assets throughout the country. The largest transactions involved shopping centres in strong catchment areas where the purchasers were frequently international investor funds such as Deka Immobilien, Credit Suisse and Goldman Sachs. Activity in the regional office market had not been as elevated because of a shortage of suitable product. One of the exceptions was the purchase by Green Reit of 1 Albert Quay in Cork for €58 million, reflecting a yield of 6.75 per cent on occupied space in the building and 7 per cent on unlet accommodation.
Mr Fogarty said that with prime Dublin investment yields now stabilised at 4.5 per cent, he expected many investors to avail of higher-yielding regional investment opportunities.
